Working Paper: CEPR ID: DP14910
Authors: Charles A. Goodhart; Jonathan Ashworth
Abstract: Over the past decade the media have regularly reported on the imminent death of cash amid rapid innovation in payment technologies. However, cash in circulation has actually been growing strongly in many counties. Perhaps unsurprisingly given Coronavirus-related health concerns, there have been renewed calls to abandon cash and some observers have argued the virus will accelerate its demise. Data thus far suggest, however, that currency in circulation has actually surged in a number of countries. While the economic shutdowns and increased use of online retailing are currently diminishing cash’s traditional function as a medium of exchange, it seems that this is being more than offset by panic driven hoarding of banknotes.
Keywords: currency usage; coronavirus; payment technologies; hoarding in panics
JEL Codes: E40; E41; E49; E63; N10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| panic-driven hoarding of cash (D14) | increase in cash circulation (E41) |
| increase in cash circulation (E41) | counters decline in cash usage due to electronic payments (E42) |
| economic shutdowns and fears of virus transmission (E44) | rise in cash demand (E41) |